Emerging markets facing halt to investments

Investors feel anxious over tighter monetary policies
Emerging markets facing halt to investments
Emerging markets

According to documents by the Institute of International Finance (IIF), seen by Economy Middle East, emerging market (EM) securities attracted around $1.1 bn in January 2022.

However, foreign investment in emerging market stocks and bonds outside China has come to a sudden end.

IIF believes investors are staying out of emerging markets’ bonds and equities at the quickest pace since March-2021.

investors feel anxious over tighter monetary policies, and fear that economies will not recover quickly from COVID in 2022.

The Omicron variant and expectations of higher US interest rates are making things worse.

Emerging market January results


Overall, January has seen increased volatility in markets, forcing investors out of EM securities.

Flows into China bonds reached $9 bn help by easing from the People’s Bank of China (PBoC).

The IIF tracker shows bond flows diminishing, as 18 of 20 major EM central banks have tightened monetary policy.

For January, non-China EM debt suffered an outflow of $4.5 bn, despite the good performance of local currency bonds across many EMs.